Inspections, Compliance, Enforcement, and Criminal Investigations
[Federal Register: December 5, 1994]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. 93N-0252]
Atul Shah; Denial of Hearing; Final Debarment Order
AGENCY: Food and Drug Administration, HHS.
SUMMARY: The Food and Drug Administration (FDA) denying Dr. Atul Shah's
request for a hearing and is issuing a final order under the Federal
Food, Drug, and Cosmetic Act (the act) permanently debarring Dr. Atul
Shah, 20 Hampton Hollow Dr., Millstone Township, NJ 08535, from
providing services in any capacity to a person that has an approved or
pending drug product application. FDA bases this order on a finding
that Dr. Shah was convicted of a felony under Federal law for conduct
relating to the development or approval, including the process for
development or approval, of a drug product, and relating to the
regulation of a drug product under the act.
EFFECTIVE DATE: December 5, 1994.
ADDRESSES: Application for termination of debarment to the Dockets
Management Branch (HFA-305), Food and Drug Administration, 12420
Parklawn Dr., rm. 1-23, Rockville, MD 20857.
FOR FURTHER INFORMATION CONTACT: Megan L. Foster, Center for Drug
Evaluation and Research (HFD-366), Food and Drug Administration, 7500
Standish Pl., Rockville, MD 20855, 301-594-2041.
Dr. Atul Shah, the former Director of Analytical Research and
Development at Par Pharmaceutical, Inc. (Par), pled guilty and was
sentenced on March 5, 1993, for making a false declaration to a grand
jury, a felony offense under 18 U.S.C. 1623. The basis for this
conviction was Dr. Shah's false claim during his testimony before the
Special Grand Jury for the United States District Court for the
District of Maryland that he could not remember that the pilot batch
for one of Par's generic drug products had been taken off accelerated
stability testing and then put back on stability testing. In fact, Dr.
Shah did remember during this testimony that the initial pilot batch
had failed accelerated stability testing, and that a new formulation of
that product had been put back on accelerated stability testing. This
testimony was material to the grand jury's investigation because Par
had filed a false abbreviated new drug application that failed to
disclose that the pilot batch had failed stability testing.
In a certified letter received by Dr. Shah on August 11, 1993, the
Deputy Commissioner for Operations offered Dr. Shah an opportunity for
a hearing on the agency's proposal to issue an order under section
306(a) of the act debarring Dr. Shah from providing services in any
capacity to a person that has an approved or pending drug product
application. FDA based the proposal to debar Dr. Shah on its finding
that he had been convicted of a felony under Federal law for conduct
relating to the development, approval, and regulation of Par's drug
The certified letter also informed Dr. Shah that his request for a
hearing could not rest upon mere allegations or denials but must
present specific facts showing that there was a genuine and substantial
issue of fact requiring a hearing. The letter also notified Dr. Shah
that if it conclusively appeared from the face of the information and
factual analyses in his request for a hearing that there was no genuine
and substantial issue of fact which precluded the order of debarment,
FDA would enter summary judgment against him and deny his request for a
In a letter dated August 25, 1993, Dr. Shah requested a hearing,
and in a letter dated October 8, 1993, Dr. Shah submitted arguments and
information in support of his hearing request. In his request for a
hearing, Dr. Shah acknowledges that he was convicted of a felony under
Federal law as alleged by FDA. However, Dr. Shah argues that FDA's
findings based on that conviction are incorrect and that the agency's
proposal to debar him is unconstitutional.
The Interim Deputy Commissioner for Operations has considered Dr.
Shah's arguments and concludes that they are unpersuasive and fail to
raise a genuine and substantial issue of fact requiring a hearing.
Moreover, the legal arguments that Dr. Shah offers do not create a
basis for a hearing (see 21 CFR 12.24(b)(1)). Dr. Shah's arguments are
II. Dr. Shah's Arguments in Support of a Hearing
A. Mandatory Versus Permissive Debarment
Dr. Shah first argues that mandatory debarment is inapplicable to
his case. He states that his false testimony subjects him to permissive
rather than mandatory debarment because his conduct underlying his
conviction does not relate to the development, approval, or regulation
of a drug product. Dr. Shah claims that his testimony ``pertained'' to
stability testing, but did not ``relate'' to stability testing.
This argument is unconvincing and fails to raise a genuine and
substantial issue of fact. Section 306(a)(2)(A) of the act (21 U.S.C.
335a(a)(2)(A)) requires debarment of an individual if FDA finds that
the individual has been convicted of a felony under Federal law for
conduct relating to the development or approval, including the process
for development or approval, of any drug product. The statutory
language, ``relating to the development or approval * * *,'' by
definition, encompasses all things that are logically connected with
the development or approval of a drug product (see Webster's Collegiate
Dictionary, Merriam-Webster Inc., Springfield, MA, 1990, ``relate'').
Dr. Shah's act of falsely testifying before the grand jury
concerning his knowledge about the stability testing used to support
approval of a Par drug product is clearly connected to the development
or approval of a drug product. Stability testing is an essential step
in the development and approval of a generic drug product.
Dr. Shah argues that he left Par long before his grand jury
testimony and, thus, this testimony could not have interfered with the
drug development and approval process. Whether or not Dr. Shah was
employed by Par at the time of his testimony is irrelevant. Dr. Shah's
testimony concerned, or was related to, FDA's approval of a Par drug
product, because it pertained to stability testing used to support
approval of that drug product.
Section 306(a)(2)(B) of the act requires debarment of an individual
if FDA finds that the individual has been convicted of a felony under
Federal law for conduct relating to the regulation of any drug product
under the act. Dr. Shah's conviction is related to the regulation of a
drug product in that it concerns matters that affect FDA's regulatory
decisions about drug products. Dr. Shaw's testimony concerns
information related to the stability of a drug product. FDA uses such
information to determine, among other things, whether to approve a
drug, whether to remove a drug from the market, whether labeling
changes are necessary, and whether approved marketing conditions need
to be altered. The act does not require that Dr. Shah's testimony
regarding stability testing directly affect FDA's regulatory decisions.
Rather, it need only relate to FDA's regulation of a drug product.
Dr. Shah contends that grand jury investigations have nothing to do
with the development and approval of a drug product. He additionally
states that the grand jury process is not a means by which FDA
regulates a company's drug products. To the contrary, FDA often
requests grand jury investigations to explore criminal activity
involving matters under the jurisdiction of FDA. Dr. Shah's crime of
lying before a grand jury relates to FDA's regulatory powers because it
interferes with the inquiry into criminal activity concerning drug
applications. Because his false declarations concerned matters relating
to the development, approval, and regulation of a drug product, Dr.
Shah's mandatory debarment is appropriate.
Dr. Shah also argues that the legislative history of the act
indicates that mandatory debarment is inapplicable in this case because
his crime did not ``corrupt'' or ``directly involve'' the approval
process. As mentioned above, Dr. Shah's crime is one that does corrupt
or perpetuate corruption of the FDA approval process because it
interfered with an investigation into criminal activity concerning
information used by FDA in deciding drug approval and other drug
regulatory issues. Whether the crime ``directly involves'' the approval
process is not the standard set forth in the statute for mandatory
debarment; ``directly involves'' does not have the same meaning as
B. The Ex Post Facto Clause
Dr. Shah also argues that the ex post facto clause of the U.S.
Constitution prohibits application of section 306(a)(2) of the act to
him because this section was not in effect at the time of Dr. Shah's
criminal conduct. With the enactment of the Generic Drug Enforcement
Act (GDEA) on May 13, 1992, Congress amended the Federal Food, Drug,
and Cosmetic Act to include section 306(a)(2).
An ex post facto law is one that reaches back to punish acts that
occurred before enactment of the law or that adds a new punishment to
one that was in effect when the crime was committed. (Ex Parte Garland,
4 Wall. 333, 377, 18 L. Ed. 366 (1866); Collins v. Youngblood, 110
S.Ct. 2715 (1990).)
Dr. Shah's claim that application of the mandatory debarment
provisions of the act is prohibited by the ex post facto clause is
unpersuasive. Because the intent behind debarment under section
306(a)(2) of the act is remedial rather than punitive, this section
does not violate the ex post facto clause.
The congressional intent with respect to actions under section
306(a)(2) of the act is clearly remedial. Congress created the GDEA in
response to findings of fraud and corruption in the generic drug
industry. Both the language of the GDEA itself and its legislative
history reveal that the purpose of the debarment provisions set forth
in the GDEA is ``to restore and ensure the integrity of the ANDA
approval process and to protect the public health.'' (See section 1,
Pub. L. 102-282, The Generic Drug Enforcement Act of 1992.) This is a
remedial rather than punitive goal. (See Manocchio v. Kusserow, 961
F.2d 1539, 1542 (11th Cir. 1992) (exclusion of physician from
participation in medicare programs because of criminal conviction is
remedial, not punitive).) Supporting the remedial character of
debarment is a statement by Senator Hatch in the Congressional Record
of April 10, 1992, at S 5616, ``* * * [t]he legislation * * * provides
a much-needed remedy for the blatant fraud and corruption uncovered in
the generic drug industry * * * during the last 3 years.''
The Supreme Court has long held that statutes that deny future
privileges to convicted offenders because of their previous criminal
activities in order to insure against corruption in specified areas do
not impose penalties for past conduct and, therefore, do not violate
the ex post facto prohibitions. (See, e.g., Hawker v. New York, 170
U.S. 189, 190 (1898) (physician barred from practicing medicine for a
prior felony conviction); DeVeau v. Braisted, 373 U.S. 154 (1960)
(convicted felon's exclusion from employment as officer of waterfront
union is not a violation of the ex post facto clause).)
In DeVeau, the court upheld a law that prohibited a convicted felon
from employment as an officer in a waterfront union. The purpose of the
law was to remedy the past corruption and to insure against future
corruption in the waterfront unions. The court in DeVeau, 363 U.S. at
The question in each case where unpleasant consequences are
brought to bear upon an individual for prior conduct, is whether the
legislative aim was to punish that individual for past activity, or
whether the restriction of the individual comes about as a relevant
incident to a regulation of a present situation, such as the proper
qualifications for a profession * * * .
As in DeVeau, the legislative purpose of the relevant statute is to
ensure that fraud and corruption are eliminated from the drug industry.
The restrictions placed on individuals convicted of a felony under
Federal law are not intended as punishment but are ``incident to a
regulation of a present situation'' (DeVeau, 363 U.S. at 160) and
necessary in order to remedy the past fraud and corruption in the
C. The Double Jeopardy Clause
In another argument, Dr. Shah claims that the proposal to debar him
under section 306(a)(2) of the act violates the double jeopardy clause
of the Fifth Amendment to the U.S. Constitution. The double jeopardy
clause states that no person shall ``be subject for the same offense to
be twice put in jeopardy of life or limb.'' Dr. Shah relies on U.S. v.
Halper, 490 U.S. 435 (1989), to argue that the Fifth Amendment double
jeopardy clause should prevent his debarment because ``jeopardy'' can
attach even in a purely civil proceeding, so long as the civil sanction
is punitive, not remedial. He further argues that his proposed
permanent debarment is punitive because (1) it is permanent and without
regard to whether Dr. Shah represents a continuing threat to the
integrity of the drug testing, approval, or regulatory processes; (2)
it precludes his providing services in any capacity to a company whose
products are subject to FDA approval, regardless of whether or not the
service relates to drug testing, approval, or regulation; (3) it can be
terminated only for substantial assistance to prosecutors and not when
the threat to public safety is eliminated; and (4) it arises out of the
mere fact of conviction and precludes factfinding into whether a risk
to the public exists.
Dr. Shah's arguments are unpersuasive. First, ``jeopardy'' cannot
attach because the effect of section 306(a)(2) of the act is remedial,
not punitive. As discussed above, the legislative goal of this section
is to restore and ensure the integrity of the drug approval process and
to protect the public health by eradicating fraud and corruption from
the drug industry. This is plainly a remedial rather than punitive
goal. (Manocchio v. Kusserow, 961 F.2d at 1542.)
The fact that Dr. Shah's debarment is permanent rather than
temporary does not signify that the legislation is nonremedial or
punitive. The Supreme Court has upheld laws which, for remedial
purposes, permanently bar a class or group of individuals from certain
occupations due to a prior criminal conviction. (See Hawker v. New
York, 170 U.S. 189, 190 (1898); DeVeau v. Braisted, 373 U.S. 154
(1960).) Additionally, these cases support the fact that Dr. Shah's
debarment can arise only because of his conviction, which Dr. Shah
argues is punitive.
Dr. Shah's conduct, which has been shown to relate to the
development, approval, and regulation of a drug product, establishes
the potential for future violations by Dr. Shah that undermine the
integrity of the drug approval and regulatory process. The act
precludes Dr. Shah's providing any type of service to holders of drug
product applications because of this possibility of future violations.
Congress proscribed all services in order to avoid the serious
administrative difficulties involved in distinguishing between those
positions clearly related to drug regulation from those not clearly
related. Such a proscription for this reason is permissible. Siegel v.
Lyng, 851 F.2d 412, 416 (D.C. Cir. 1988.)
Dr. Shah's assertion that the special termination provision is
punitive is unpersuasive. In fact, the provision advances the remedial
objective of ensuring the safety and efficacy of the country's drug
supply. The cooperation fostered by this special termination provision
enables FDA to eliminate from the drug industry many actors who are
corrupting the industry, endangering the public health, and destroying
consumers' confidence in the Nation's drug supply. Convictions based on
debarred persons' assistance can form the basis for other debarments if
the terms of the act are satisfied, which further serves the act's
An individual's debarment will not be terminated if FDA finds that
the remedial intent of the act will be undermined by such termination.
The act does not guarantee termination of debarment to those who are
debarred. The power to terminate debarment is discretionary with FDA,
and the agency is bound by the provision's terms to exercise this
authority in a manner consistent with the interest of justice and
protection of the integrity of the drug approval process (21 U.S.C.
Due to the potentially serious consequences to the public health of
fraud and corruption in the drug industry, the permanent debarment of
convicted felons like Dr. Shah is not an excessive means to eliminate
fraud from the industry. The legislative history of the GDEA is replete
with statements, some cited above, that the act provides a reasonable
means of ridding the drug industry of widespread corruption and to
restore consumer confidence in generic drugs.
D. Due Process
In his final argument, Dr. Shah claims that his debarment violates
the due process clause of the U.S. Constitution because it bears no
rational relationship to any legitimate purpose. He asserts that his
conduct does not automatically demonstrate a likelihood of future
violations under the act. He also contends that debarment precludes
providing services regardless of whether such service bears any
relationship to the development, approval, or regulation of a drug
Dr. Shah's claims are unpersuasive. Dr. Shah fails to demonstrate
that this debarment is unrelated to any legitimate purpose. Although
his conduct does not automatically establish a likelihood of future
violations, it does reveal the possibility of future violations.
Debarment guards against future violations by prohibiting individuals
``from providing services in any capacity to a person that has an
approved or pending drug product application'' in order to meet the
legitimate regulatory purpose of restoring the integrity of the drug
approval and regulatory process and protecting the public health. Dr.
Shah acknowledges that protecting the public health is a legitimate
purpose. As mentioned above, Congress can appropriately achieve this
purpose by proscribing ``all services'' due to the serious
administrative difficulties involved in distinguishing between those
positions clearly related to drug regulation from those not clearly
related. These difficulties would include the problem of ascertaining
the exact nature of the employee's relationship with the employer as
well as defining what constitutes a sufficient nexus with the
regulatory scheme under all circumstances.
Dr. Shah's claim that FDA's refusal to grant a hearing in his case
would violate procedural due process is inaccurate. Dr. Shah
acknowledges that he was convicted as alleged by FDA and has raised no
genuine and substantial issue of fact regarding his conviction. The
facts underlying Dr. Shah's conviction have been established by his
conviction, and, therefore, are not at issue. While Dr. Shah's legal
arguments do not create a basis for a hearing, FDA has considered these
arguments before taking final action and has found them unpersuasive.
Accordingly, the Interim Deputy Commissioner for Operations denies Dr.
Shah's request for a hearing.
III. Findings and Order
Therefore, the Interim Deputy Commissioner for Operations, under
section 306(a) of the act, and under authority delegated to her (21 CFR
5.20) finds that Dr. Atul Shah has been convicted of a felony under
Federal law for conduct: (1) relating to the development or approval,
including the process for development or approval, of a drug product
(21 U.S.C. 335a(a)(2)(A)); and (2) relating to the regulation of a drug
product (21 U.S.C. 335a(a)(2)(B)).
As a result of the foregoing findings, Dr. Atul Shah is permanently
debarred from providing services in any capacity to a person with an
approved or pending drug product application under section 505, 507,
512, or 802 of the act (21 U.S.C. 355, 357, 360b, or 382), or under
section 351 of the Public Health Service Act (42 U.S.C. 262), effective
December 5, 1994. (21 U.S.C. 335a(c)(1)(B) and (c)(2)(A)(ii) and 21
Any person with an approved or pending drug product application who
knowingly uses the services of Dr. Shah in any capacity, during his
period of debarment, will be subject to civil money penalties (21
U.S.C. 335b(a)(6)). If Dr. Shah, during his period of debarment,
provides services in any capacity to a person with an approved or
pending drug product application, he will be subject to civil money
penalties (21 U.S.C. 335b(a)(7)). In addition, FDA will not accept or
review any abbreviated new drug application or abbreviated antibiotic
drug application submitted by or with Dr. Shah's assistance during his
period of debarment.
Dr. Shah may file an application to attempt to terminate his
debarment pursuant to section 306(d)(4)(A) of the act. Any such
application would be reviewed under the criteria and processes set
forth in section 306(d)(4)(C) and (d)(4)(D) of the act. Such an
application should be identified with Docket No. 93N-0252 and sent to
the Dockets Management Branch (address above). All such submissions are
to be filed in four copies. The public availability of information in
these submissions is governed by 21 CFR 10.20(j). Publicly available
submissions may be seen in the Dockets Management Branch between 9 a.m.
and 4 p.m., Monday through Friday.
Dated: November 21, 1994.
Linda A. Suydam,
Interim Deputy Commissioner for Operations.
[FR Doc. 94-29768 Filed 12-2-94; 8:45 am]
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